Chancellor Rishi Sunak gives some relief to retailers, but corporation tax is set to rise from 19 per cent to 25 per cent in 2023
The Chancellor said the 100% business rates holiday would be extended till the end of June for retailers and hospitality and leisure firms that operate premises on high streets, shopping centres and retail parks. He added that for the remaining nine months of the tax year business rates would still be discounted by two thirds up to a value of £2 million for closed businesses.
Sunak also announced a new £6,000 restart grant for non-essential retailers. This will be provided in April to help businesses reopen.
The Chancellor also confirmed that the furlough scheme will be extended to the end of September with furloughed staff receiving 80% of their salary for hours not worked. Nothing will change from the present scheme until July when employers will be asked to contribute 10% and 20% in August and September.
Sunak also set out a new loan recovery scheme to replace the Covid loan packages allowing businesses of any size to apply for loans from £25,000 to £10 million until the end of the year with 80% guaranteed by the UK government. “As the Bounce Back Loan and CBIL schemes come to an end, we’re introducing a new recovery loan scheme to take their place,” he said.
An increase to 25% in Corporation Tax will be introduced in 2023, the tax will be payable on profits and is not scheduled to come into effect until after the economic recovery. However, a new “small profits rate” will maintain the 19 per cent rate for businesses with profits of £50,000 or less – meaning around 70 per cent of companies many of which are retailers would be “completely unaffected” by the tax hike.
Sunak said there would be a taper above £50,000, so that only businesses with profits of £250,000 or greater would be taxed at the full 25% rate. This equated to around 10 per cent of companies.
No mention was made of the online sales tax despite recent speculation that he would do so.
Michelle Ovens, CBE, Founder of Small Business Britain is pleased by many of the support packages set out in the budget. ‘We welcome the Help To Grow packages announced today as a strong step forwards in practical business support. We know small businesses will be the engine of recovery for the U.K. economy and embracing all opportunities like digital training, digital vouchers and expert management training will be key to unlocking that potential,’ says Michelle. ‘The new business grants for those hardest hit by restrictions are also extremely good news and a step in the right direction. Retail, hospitality, leisure and personal care have been devastated by the pandemic and need all the help they can get to get back on their feet.’